PRESS-NEWS.org - Press Release Distribution
PRESS RELEASES DISTRIBUTION

Firms with political ties may be bad investment

Study suggests politically connected companies with excess cash holdings may be putting political interests before profitability

2012-07-21
(Press-News.org) It may pay to invest, but it might be worth more to invest in companies that do not have political ties, says one University of Alberta researcher.

Sadok El Ghoul, an associate professor at Campus Saint-Jean, and fellow researchers from the American University of Sharjah and the Olayan School of Business recently presented a paper at the annual conference of the International Journal of Accounting that explored the workings of politically connected firms. In a review of firms from 31 countries, they contend that firms that have some level of political connection, direct or indirect, are more likely to have greater cash holdings than non-connected firms. This money, they suggest, is often used as a resource for the firms' political friends.

Corporations: the cash cow that keeps on giving?

El Ghoul and his colleagues say that the motivations of managers in politically connected firms may be misplaced. El Ghoul says that hoarding excess cash runs contrary to the notion of maximizing profit and value for a company's shareholders. Instead, he says, this money could be used by the politically connected friends of the firm to serve personal interests related to their political agenda. These corporations are viewed as cash cows for those in political power, he says.

"The companies might use that excess cash to finance political campaigns and to pay bribes. They might also hoard more cash to invest in unprofitable regions, in regions where votes matter but profitability is not there," said El Ghoul. "These are uses that do not obey the objective of value maximization, but rather obey the political objectives of the politician friends of those politically connected firms."

Coalition of the ineffective?

The root of the problem, El Ghoul says, is poor corporate governance. He says studies have indicated that politically connected firms often have weak governance structures. These firms also have poor disclosure practices and are less effective at managerial oversight. "In several countries, managers of politically connected firms operate with impunity, without being monitored by shareholders," he said.

Change requires political will

El Ghoul says minority shareholders are the real victims of these types of firms. He says they lose out on receiving fair recompense—dividends—for the stock. They are also essentially powerless to change the regulation process, because change requires political will from the very politicians who benefit from the situation, making such a reform unlikely. El Ghoul also notes that in many countries, large shareholders control the company and establish boards, so there is likely little room for change from within a company, either.

"The politicians with ties to the corporate sector have no incentive to change the regulations in favour of more transparent, well-functioning corporate governance systems," said El Ghoul. "The minority shareholders do not have a say in the corporate behavior, on what the large shareholders are doing.

"In several emerging economies, minority shareholders are stuck between those politicians and large shareholders. This is a deadlock."

INFORMATION:

END



ELSE PRESS RELEASES FROM THIS DATE:

UCLA researchers create highly transparent solar cells for windows that generate electricity

2012-07-21
UCLA researchers have developed a new transparent solar cell that is an advance toward giving windows in homes and other buildings the ability to generate electricity while still allowing people to see outside. Their study appears in the journal ACS Nano. The UCLA team describes a new kind of polymer solar cell (PSC) that produces energy by absorbing mainly infrared light, not visible light, making the cells nearly 70% transparent to the human eye. They made the device from a photoactive plastic that converts infrared light into an electrical current. "These results ...

Severe flu increases risk of Parkinson's: UBC research

2012-07-21
Severe influenza doubles the odds that a person will develop Parkinson's disease later in life, according to University of British Columbia researchers. However, the opposite is true for people who contracted a typical case of red measles as children – they are 35 per cent less likely to develop Parkinson's, a nervous system disorder marked by slowness of movement, shaking, stiffness, and in the later stages, loss of balance. The findings by researchers at UBC's School of Population and Public Health and the Pacific Parkinson's Research Centre, published online this ...

Children in foster care develop resilience through compassion

2012-07-21
A new study shows that a therapeutic intervention called Cognitively-Based Compassion Training (CBCT) appears to improve the mental and physical health of adolescents in foster care. CBCT is a tool that provides strategies for people to develop more compassionate attitudes toward themselves and others. It is well documented that children in foster care have a high prevalence of trauma in their lives. For many, circumstances that bring them into the foster care system are formidable -- sexual abuse, parental neglect, family violence, homelessness, and exposure to drugs. ...

Radiation damage bigger problem in microelectronics than previously thought

2012-07-21
The amount of structural damage that radiation causes in electronic materials at the atomic level may be at least ten times greater than previously thought. That is the surprising result of a new characterization method that uses a combination of lasers and acoustic waves to provide scientists with a capability tantamount to X-ray vision: It allows them to peer through solid materials to pinpoint the size and location of detects buried deep inside with unprecedented precision. The research, which was conducted by post-doctoral fellow Andrew Steigerwald under the supervision ...

NASA's Aqua Satellite sees Khanun's remnants dissipating over China

2012-07-21
NASA's Aqua satellite has been tracking the remnants of Tropical Depression Khanun, and infrared data revealed that it has moved over northeastern China where it is now dissipating. NASA's Aqua satellite passed over Khanun on July 18, 19 and 20 and tracked the northeastern progression of the tropical cyclone after it made landfall. On Wednesday, July 18 at 1659 UTC (12:59 p.m. EDT/U.S.), Tropical Depression Khanun's center was still in the Yellow Sea (west of South Korea). At that time, the Atmospheric Infrared Sounder (AIRS) instrument onboard NASA's Aqua satellite saw ...

NASA satellite sees western north Pacific Tropical Cyclone strengthening

2012-07-21
NASA satellite data has watched cloud temperatures drop in a low pressure system in the western North Pacific Ocean called System 92W, indicating that there's more uplift and power in the storm. That's a sign the storm is strengthening. Infrared data gathered by NASA's Atmospheric Infrared Sounder (AIRS) instrument indicate cloud top temperatures as well as sea surface temperatures. NASA's Aqua satellite passed over System 92W on July 18, 19 and 20 and watched the low pressure area develop east of the Philippines, organize and move northeast of Luzon, Philippines by July ...

Solar corona revealed in super-high-definition

2012-07-21
VIDEO: This time-lapse movie shows activity in the sun's corona on July 11, 2012, with 10 minutes compressed into 10 seconds. It begins with images from the Atmospheric Imaging Assembly (AIA)... Click here for more information. Today, astronomers are releasing the highest-resolution images ever taken of the Sun's corona, or million-degree outer atmosphere, in an extreme-ultraviolet wavelength of light. The 16-megapixel images were captured by NASA's High Resolution Coronal ...

Todd Skinner, Brand Marketing Expert Announces New, Innovative Electronic Business Impressions!

2012-07-21
WHAT: Malibu business owner, Todd Skinner announces the launch of a new electronic correspondence company, E2b Business Impressions. The online business provides customized, personalized e-greetings, e-blasts, e-thank you's, social media pages and online ads to the customer all with only one link at one low price! "I noticed the need for individual, customized e-mailers that weren't being used for mass e-mailing." said Skinner. "There just wasn't anything out there like that, so I started making my own and using them in my business correspondence. The ...

The Law Offices of Eric R. Bernstein Covers the NYC Area

2012-07-21
Eric R. Bernstein's law office will help cover the people in the NYC area in terms of legal aspects. People who have been charged or facing charges have to seek for the right legal counsel. These days, some people are convicted of the crime they did not do or they did not get the chance to have a fair trial. It might be because of the lack of legal counsel on their side. With the services of the law offices of Eric R. Bernstein, people will have the opportunity to be heard. Before talking to anyone else, they have to seek for its services. The law offices have the most ...

Moving Company Expands Services to Baltimore, Maryland

2012-07-21
Hercules Services LLC, a professional moving company opens a new office in Baltimore, Maryland - "Movers of Baltimore" (www.baltimoremd-movers.net). Hercules Services LLC has been successfully operating in and around Northern Virginia, Southern Maryland, and District of Columbia and now expands its unrivaled service and professionalism to the Baltimore area. With over ten years of local and long distance moving experience the company is known for competitive pricing and commitment to providing best customer experience. "Movers of Baltimore provides the ...

LAST 30 PRESS RELEASES:

USC team demonstrates first optical device based on “optical thermodynamics”

Microplastics found to change gut microbiome in first human-sample study

Artificially sweetened and sugary drinks are both associated with an increased risk of liver disease, study finds

Plastic in the soil, but not as we know it: Biodegradable microplastics rewire carbon storage in farm fields

Yeast proteins reveal the secrets of drought resistance

Psychiatry, primary care, and OB/GYN subspecialties hit hardest by physician attrition

New Canadian study reveals where HIV hides in different parts of the body

Lidocaine poisonings rise despite overall drop in local anesthetic toxicity

Politics follow you on the road

Scientists blaze new path to fighting viral diseases

The mouse eye as a window to spotting systemic disease

AI and the Future of Cancer Research and Cancer Care to headline October 24 gathering of global oncology leaders at the National Press Club: NFCR Global Summit to feature top scientists, entrepreneurs

FDA clears UCLA heart tissue regeneration drug AD-NP1 for clinical trials

Exploring the therapeutic potential of cannabidiol for Alzheimer's

We need a solar sail probe to detect space tornadoes earlier, more accurately, U-M researchers say

Acute myeloid leukemia (AML): Disease risk but not remission status determines transplant outcomes – new ASAP long-term results

Sperm microRNAs: Key regulators of the paternal transmission of exercise capacity

Seeing double: Clever images open doors for brain research

Inhaler-related greenhouse gas emissions in the US

UCLA Health study finds inhalers for asthma and COPD drive significant greenhouse gas emissions

A surgical handover system for patient physiology and safety

Cardiovascular health changes in young adults and risk of later-life cardiovascular disease

Nurse workload and missed nursing care in neonatal intensive care units

How to solve the remote work stalemate – dissertation offers tools for successful hybrid work

Chip-based phonon splitter brings hybrid quantum networks closer to reality

Texas Children’s researchers create groundbreaking tool to improve accuracy of genetic testing

Milken Institute, Ann Theodore Foundation announce more than $2.5 million in new funding for sarcoidosis research and launch new call for proposals

Boston University professor to receive 2025 Eugene Braunwald Academic Mentorship Award

Pusan National University researchers reveal how forest soil properties influence arsenic mobility and toxicity in soil organisms

Korea University researchers find sweet taste cells resist nerve damage through c-Kit protein

[Press-News.org] Firms with political ties may be bad investment
Study suggests politically connected companies with excess cash holdings may be putting political interests before profitability